IndiaThinktag:typepad.com,2003:weblog-5282092007-11-18T17:33:29-05:00The original blog from IndiaThink Founder Brandi Moore...for more visit IndiaThink.com TypePadTo be or not to be--in India that istag:typepad.com,2003:post-417290682007-11-18T17:33:29-05:002007-11-18T17:33:29-05:00This is the question CIO magazine puts through the paces this month with two articles; one focusing on the upside of India and one focusing on the down side. I think before I write: glass half full or glass half...Brandi Moore
<div xmlns="http://www.w3.org/1999/xhtml"><p>This is the question CIO magazine puts through the paces this month with two articles; one focusing on the upside of India and one focusing on the down side.&nbsp; </p>
<p>I think before I write: glass half full or glass half empty?&nbsp; I am not convinced by the arguments laid out in the half full article.&nbsp; India is a great place to send your customer service and back office tasks.&nbsp; Great.&nbsp; Pretty sure most of the world already knows that.&nbsp; The author offers little else for us to consume. The cons articles is much more interesting and I pulled the tidbits of interest here. You can read the feature yourself: <a href="http://www.cio.com/article/146451/Seven_Reasons_Why_Outsourcing_to_India_is_Good_for_Your_Business/1">Half Full </a>/ <a href="http://www.cio.com/article/146450/Eight_Reasons_Why_Outsourcing_to_India_Could_Hurt_Your_Business/2">Half Empty</a></p>
<p>1.) The NEED for an in-country project manager that understands India's culture to help move the project along.&nbsp; This is identified as a need for successful projects but is also identified as a big problem because these types of people are not available.&nbsp; I have already talked about this in other <a href="http://namaskar.typepad.com/namaskar/2007/03/key_to_success_.html">posts</a>. <br />&nbsp; </p>
<p>2.) Infrastructure. I am really starting to wonder when India is going to wake up and do something about their infrastructure.&nbsp; Its the pits.&nbsp; Really.&nbsp; I have profiled other groups <a href="http://namaskar.typepad.com/namaskar/2007/11/indias-infrastr.html">here</a> who are living with infrastructure issues that impact their delivery of goods to market.&nbsp; This piece does not speak to that problem, rather they complain about how long it takes to traverse Bangalore or get to the airport. So, in essence the infrastructure is starting to hit executives where it really matters: the time column.&nbsp; China is outspending India 7 to 1 in this area.&nbsp; How long will it take India to make changes?</p>
<p>3.) The <a href="http://namaskar.typepad.com/namaskar/2007/11/raging-rupee.html">Raging Rupee</a>.&nbsp; This article claims the recent dollar to rupee exchange has &quot;has eroded about 11 percent of the dollar's purchasing power in India&quot;&nbsp; Yikes.&nbsp; 11% is a big number.&nbsp; Firms are currently absorbing this cost but its expected that times will change in the coming months.&nbsp; Previous hours that were not billed out will be...and contract negotiations will not be pretty.</p>
<p>4.) Rising alternatives.&nbsp; The author talks about India &quot;Fatigue&quot; and the availability of workers in other places such as Eastern Europe, Mexico, Latin America, Middle East etc... However, I believe they are missing the point of globalization, which is SPEED.&nbsp; SPEED is gained by having multiple working on the same problem across multiple time zones.</p>
<p>&nbsp; </p></div>
India's Mind-bogglingly Large Middle Classtag:typepad.com,2003:post-414679662007-11-13T06:00:00-05:002007-11-13T06:00:00-05:00McKinsey issued a report recently titled "Tracking the Growth of India's Middle Class" with the headliner: "Over the next two decades, the country's middle class will grow from about 5 percent of the population to more than 40 percent and...Brandi Moore
<div xmlns="http://www.w3.org/1999/xhtml"><p>McKinsey issued a report recently titled &quot;<a href="http://www.mckinseyquarterly.com/Economic_Studies/Tracking_the_growth_of_Indias_middle_class_2032_abstract">Tracking the Growth of India's Middle Class</a>&quot; with the headliner:</p>
<p>&quot;Over the next two decades, the country's middle class will grow from about 5 percent of the population to more than 40 percent and create the world's fifth largest consumer market&quot;</p>
<p>India's consumer market in 2025:</p>
<ul><li>will contain 583 million people categorized as middle class</li>
<li>62% of the country's spending power will live in cities. 75% of city dwellers will be part of the middle class as compared with 0.1% today.&nbsp; </li>
<li>India's wealthiest citizens will total 24 million</li></ul>
<p>The question is how can you as a proprietor of services and merchandise capture this emerging group of buyers?&nbsp; </p>
<p>Today most Indians participate in what McKinsey calls an &quot;informal&quot; economy and what most westerners would call a very large disorganized bazaar of sorts with locations stretching from backyards to streets to small shops.&nbsp; To put this in perspective think about the last time you got a flat tire.&nbsp; You have a spare tire which is now on the car and you are off to get a replacement...any option found on the side of the road, say under a tent?&nbsp; That tent of course has an air compressor that is operated by some type of gas powered engine.&nbsp; No Costco around these parts only the group of entrepreneurs stationed on the side of the road all over India ready to bargain away to get to a deal.<br /> </p>
<p>Because India has an informal economy its citizens seek value which is found through negotiation.&nbsp; Negotiation is not to find the right or best price, rather it is poised to move to a mutual agreement between parties. As Paul Davis states in his book <em>What's This India Business</em>; &quot;Indians are above all else traders&quot;.&nbsp; Factor this in with their need to be polite and you have an interesting situation on your hands for any negotiation--its rare that you will hear an Indian say NO.&nbsp; Consider this in the context of buying and selling to a group that wants to bargain but doesn't feel comfortable being aggressive.&nbsp; How is this delimma resolved?</p>
<p>One interesting case study was written up on the WSJ a few months back where the owner of Big Bazzar was profiled regarding his attempt so sell to India out of a &quot;box&quot; store.&nbsp; His answer was to &quot;replace long wide aisles with narrow, crooked ones&quot; to make it feel chaotic, and placing battered produce in the same box as good quality to make customers believe they are getting a good deal.&nbsp; Indians are not accustomed to plastic containers so they are sold unpackaged razors from large bins.&nbsp; He hires people to walk around and talk about specials through loudspeakers to add to the already noisy environment.</p>
<p>Or what he does is recreate the idea of buying from the man on the side of the road with the large trucks blaring by and music playing right next to your ear as you are trying to get something that fits your rim.</p>
<p>Beyond the grocery store example McKinsey predicts that people will spend dollars on education, health care (private health care that is), transport (cars), and communications.&nbsp; They suggest that companies interested in tackling this market should get started NOW....&nbsp; </p> </div>
Raging Rupeetag:typepad.com,2003:post-414382682007-11-12T10:34:48-05:002007-11-12T10:34:48-05:00Last time I was in India the exchange was 46 Rupees to 1 dollar. Today its 39 to a dollar. As the dollar continues it plunge into never never land the impact on exports from India is large. Washington Post...Brandi Moore
<div xmlns="http://www.w3.org/1999/xhtml"><p>Last time I was in India the exchange was 46 Rupees to 1 dollar.&nbsp; Today its 39 to a dollar.&nbsp; As the dollar continues it plunge into never never land the impact on exports from India is large.&nbsp; </p>
<p><a href="http://www.washingtonpost.com/wp-dyn/content/article/2007/11/08/AR2007110802274.html?referrer=emailarticle">Washington Post</a> featured an article about this on Friday Nov 11th.&nbsp; In the piece they site numbers I have not uncovered before that I will share here:</p>
<ul><li>Hardest hit exporters are those garments, leather goods, handicrafts.</li></ul>
<ul><li>Information technology sectors have also been hit.</li></ul>
<ul><li>Job losses thus far are estimated at 4 million people with the expectation that 8 million will be effected by March 2008</li></ul>
<p>The focus of the piece is an owner of a garment producer who creates pieces for Ralph Lauren, Ann Taylor, Liz Clairborne etc.&nbsp; His concern is around where the work will go next if the Rupee &quot;rages&quot; on. Cambodia, Thailand?</p>
<p>What many of us may not know is that the garment trade in India is belabored by &quot;Ghandi&quot; laws that prohibit imports of particular materials making it very difficult for India to compete in any other space but these high end pieces. They are not able to import the volume of cheap fabrics in the same way that China is resulting in silks and high end cotton pieces being India's niche market.</p>
<p>Is India about to go through a similar transition to the US where people will have to find jobs outside the unskilled positions because they will eventually be moved to other locations?&nbsp; The rule of globalization is everything speeds to the cheapest market available.&nbsp; The question then becomes will India spend its raging Rupee on infrastructure to build schools and other necessary items to accommodate these society changes?</p>
<p>&nbsp; <br /> </p></div>
India's Infrastructure or India's Global Reach? tag:typepad.com,2003:post-410756042007-11-03T23:28:26-04:002007-11-03T23:28:26-04:00Week of Nov 5th’s Fortune Magazine has a feature on India focusing on the changes in its dynamics, clout, innovation, and business world over the past ~15 years. Highly recommend you read this article and enjoy some of the pictures...Brandi Moore
<div xmlns="http://www.w3.org/1999/xhtml"><p>Week of Nov 5th’s Fortune Magazine has a feature on India focusing on the changes in its dynamics, clout, innovation, and business world over the past ~15 years. Highly recommend you read this article and enjoy some of the pictures that precede it. India is in the middle of a marketing blitz around its 60th anniversary of independence.&nbsp; These efforts have been subdued in the press as most of India’s coverage this week surrounds their inability to pass nuclear accords with the US and details the Prime Ministers extensive efforts to convince the world that India continues to be &quot;open for business&quot; regardless of its political choices. </p>
<p>The author has a few messages sprinkled through out the piece but one that I believe must be brought to the surface is the economic and political structures in India and how they have done little to encourage growth inside the continent.&nbsp; One feature inside the piece details a Hyundai venture located in Chennai.&nbsp; The plant is highly successful but not without challenges--all of which surround infrastructure.&nbsp; Or rather the lack of it.&nbsp; Problems like difficulty in delivering products to nearby ports and no government support in its efforts to get water, electricity and other energy sources required to support its operations.</p>
<p>These are very important considerations that companies must understand as they enter the India market place.&nbsp; The complexities abound around getting the right infrastructure to make your strategy work.&nbsp; As the author states “China outspends India on infrastructure by a ratio of 7 to 1. The result: India’s manufactures pay twice as much for electric power as do their Chinese counterparts and three times as much for railway transport.”&nbsp; These numbers are staggering for groups interested in moving into India for manufacturing.&nbsp; Hyundai took on an Indian location based on a rejected application to China; their first choice.&nbsp; How will India solve these problems with a government that has a ‘dysfunctional political system---driven by caste, religion, party and faction?”&nbsp; As competiton heats between these two asian giants India must face its infrastructure woes and solve them.&nbsp; Its unclear how long it will take the government to wake up to this harsh reality--my prediction is that its going to take a while.&nbsp; India has grown too accustom to daily power outages and other infrastructure failures.&nbsp; And the way India has grown has not been like China, through its government.&nbsp; Rather it has been in spite of it.&nbsp; </p></div>
India Ranks 3.5 on TI's Corruption Index tag:typepad.com,2003:post-395246982007-09-28T16:40:12-04:002007-09-28T16:40:12-04:00From the Times of India: ___snip________ NEW DELHI: India has improved its position in the comity of nations in terms of integrity as it is ranked 72 among 180 countries in the corruption index this year, Transparency International has said....Brandi Moore
<div xmlns="http://www.w3.org/1999/xhtml"><p>From the <a href="http://timesofindia.indiatimes.com/India/India_72_in_corruption_index_Transparency_International/articleshow/2404916.cms">Times of India:</a></p>
<p>___snip________<br /><span style="color: #000000;"><span name="test" id="test" style="font-size: 14px; font-weight: normal; font-family: Arial,Helvetica,sans-serif; line-height: 18px;"><span style="font-size: 10pt;">
NEW
DELHI: India has improved its position in the comity of nations in terms of
integrity as it is ranked 72 among 180 countries in the corruption index this
year, Transparency International has
said.
</span> <br /> <br /> <span style="font-size: 10pt;">
It was at the 70th
position among 163 countries last
year.
</span> <br /> <br /> <span style="font-size: 10pt;">
Accordingly, India's
integrity index has marginally improved to 3.5 in 2007 from 3.3 a year ago on a
scale of 10 points, TI said in a report released
today.
</span> <br /> <br /> <span style="font-size: 10pt;">
India's rank at 72 in
corruption index is also shared by China, Mexico, Morocco and Peru. Pakistan is
way down at 138th
position.
</span> <br /> <br /> <span style="font-size: 10pt;">
Denmark, Finland and
New Zealand are the least corrupt countries, which jointly top the list with
integrity index of 9.4 points each.<br /> _______snip_____</span></span></span><br /><span style="color: #000000;"><span name="test" id="test" style="font-size: 14px; font-weight: normal; font-family: Arial,Helvetica,sans-serif; line-height: 18px;"><span style="font-size: 10pt;">So what does this mean?&nbsp; According to Transparency Internationale's web site:</span></span></span></p>
<p><span style="color: #000000;"><span name="test" id="test" style="font-size: 14px; font-weight: normal; font-family: Arial,Helvetica,sans-serif; line-height: 18px;"></span></span><br /><span style="color: #000000;"><span name="test" id="test" style="font-size: 14px; font-weight: normal; font-family: Arial,Helvetica,sans-serif; line-height: 18px;"><span style="font-size: 10pt;"><em>How should the CPI scores be interpreted?<br /><br />The CPI should be interpreted as a ranking of countries with scores ranging from 0 (highly corrupt) to 10 (highly clean).</em><br /><br />So you need to ask yourself if really it matters that India has moved to 72.&nbsp; No.&nbsp; Really one should be looking at the composite score of 3.5.&nbsp; Because of the way the scale is read out across 180 countries its quite deceiving to convey that 72 is a good number when 3.5 is really not so good and no country scored lower than 1.4.<br /><br />Looking forward to the lively discussion that these corruption posts always create....<br /><br /></span></span></span></p></div>